Obama mulls government shutdown

WASHINGTON — Senior White House officials are discussing a budget strategy that could lead to a government shutdown if Republicans continue to demand deeper spending cuts, lawmakers and Democrats familiar with the administration’s thinking said Thursday.

The posture represents a more confrontational approach than that of this spring, when President Barack Obama decided not to escalate a fight over across-the-board reductions known as sequestration in an earlier budget battle with Republicans.

The change in tone has been evident in repeated and little-noticed veto threats over the past few weeks by Obama, who has rarely issued the warnings with such frequency. He has made it clear that he will not sign into law Republican spending bills that slash domestic programs even more deeply than sequestration.

If Republicans do not relent and the White House sticks to its position, a shutdown would be likely at the end of September, when Congress must authorize a new measure to fund the government.

The discussions at the White House illustrate the extent to which the looming budget battle is worrying the administration, which is seeking to advance Obama’s second-term agenda in the face of GOP opposition.

White House officials also are discussing a potential strategy to try to stop the sequestration cuts from continuing, the lawmakers and Democrats said. Under this scenario, the president might refuse to sign a new funding measure that did not roll back the sequester.

But some of Obama’s top economic advisers fear that they may not be able to stop what they consider damaging cuts without a sharper confrontation, the sources said. Other advisers are urging a more cautious course, saying it would be better for Obama to seek a more targeted agreement that would increase funding for a smaller set of priorities.

Obama would still prefer to replace all the domestic and defense cuts with a long-term budget deal and avoid talk of a shutdown, according to the people familiar with the discussions. But some White House officials consider the date the last chance to cancel a portion of the sequestration cuts before the 2014 midterm elections.

White House officials are all but resigned to any potential budget agreement lasting just a year or two – not the long-term fiscal pact they have sought.

Negotiations have not started on Capitol Hill, where the two parties are far apart, and many officials on both sides are skeptical that any agreement will be found before the September deadline. Senate Democrats are advancing spending bills worth $1.048 billion, while Republicans are assuming a total spending level of $967 billion.

The White House is likely to frame any government shutdown as a consequence of Republicans protecting the wealthy at the expense of the nation’s economy and poor.

But Republicans are portraying Obama’s increasingly confrontational tone — which has been on display this week as he began a series of economic speeches — as a way to pull more taxes from the rich to fuel additional government spending.

Republicans have seized on Obama’s veto threats and speeches as a setup for a shutdown. “The president wants to raise taxes so he can do more stimulus spending,” House Speaker John Boehner of Ohio said this week. “And the fact is, it’s his sequester, and if we’re going to get rid of his sequester, we’re going to have to look for smarter spending cuts in order to do that.”

Congressional Democrats say they and the White House are preparing for a bigger clash in September.

“I think they’re in a position, and I’m urging my House members to be in a position, of a much stronger, less flexible agreement with policies that we believe undermine the operations of our government, our national security and our creditworthiness,” said House Minority Whip Steny Hoyer of Maryland.

Several Democrats suggested that they might accept an interim spending measure to keep the government open into November, delaying the fight until just around the time of another looming deadline: raising the statutory limit on federal borrowing. The exact deadline has not been determined by the Treasury Department, but the Congressional Budget Office recently estimated it would come in October or November.

Republicans are insisting they will demand additional spending cuts in exchange for agreeing to raise the debt limit, while Obama and Democrats say the nation’s creditworthiness cannot be subject to negotiation.

The president maintained the same position on that issue at the beginning of the year, and Republicans ultimately folded by agreeing to suspend the debt limit for several months. It is not clear whether they will acquiesce again.

The choice about how hard to fight Republicans over sequestration in September tugs at two competing impulses for the president. One is to avoid brinkmanship that could endanger the economy or unravel government operations. The other is to try to force an end to spending cuts that represent the opposite of his core second-term vision.

Deciding to escalate the confrontation with Congress over the budget would be a break from the president’s approach earlier this year. In March, he signed a budget resolution that continued to fund the government through Sept. 30 without forcing a fight over the sequestration cuts. Several weeks later, he agreed to move around money to cancel furloughs at the Federal Aviation Administration to eliminate flight delays, angering congressional Democrats who wanted broader negotiations.

Administration officials said that they had no choice because Senate leaders said that Congress probably would override any veto.

Congressional Democrats, led by Rep. Chris Van Hollen of Maryland, told White House Chief of Staff Denis McDonough after the FAA episode that the administration had to send a much clearer signal about its intentions.

In recent weeks, Obama has been issuing a fusillade of veto threats and signaling that he will not sign bills that do not support his priorities.

In a Thursday letter to Van Hollen, ranking Democrat on the House Budget Committee, the Congressional Budget Office said canceling sequestration cuts in 2014 would create 900,000 jobs.

“There’s a real cost to keeping the sequester in place,” Van Hollen said in an interview, but he added that the options Democrats will consider in September will depend on public response.

“There is evidence that the pressure from the sequester is continuing to build,” he said. “I think the viable options will depend in part on what the public mood is at the time.”

There is little time for Congress to work out its differences. Lawmakers will leave for August recess next week and will not return until Sept. 9. Obama will spend a week in August on Martha’s Vineyard, Mass., and will be at a summit in Russia in early September.

That leaves only two weeks for both sides to reach a budget agreement upon their return. Some lawmakers are considering a short-term extension of budget funding to gain additional flexibility.